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AUDITING THEORY

1
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Elements of materiality and risk
b
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Elements of internal control
d
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The man way(s) to reduce information risk is to have
a
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The user shares the information risk with management
c
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All of these
...
The following bodes develop and or issues technical and professional standards for
implementation:
I
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National Economic Development Authority
III
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Securities and Exchange Commission
V
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Cooperative Commission of the Philippines
According to the revised code of ethics for CPA’s, which of the foregoing are sources of
technical and professional standards in the Philippines?
a
...

c
...


I, III, IV, V
I, III, IV, V, VI
I, III, IV
All of them
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An audit made in accordance with Philippine Standards on Auditing generally should
a
...

b
...

c
...

d
...

5
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b
...

d
...
In which of the following situations would an auditor ordinarily choose between expressing
neither a qualified opinion nor an adverse opinion?
a
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b
...

c
...

d
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7
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Which of the
following is the most important consideration in responding to the assessed risk?
a
...

b
...

c
...

d
...

8
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Advising partners and professional staff of those assurance clients and related entities from
which they must be independent
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Consulting an independent third party, such as a committee of independent directors, a
professional regulatory body, or another professional accountant
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Policies and procedures that will enable the identification of interests or relationships
between the firm or members of engagement teams and clients
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External communications empowered third party of the reports, returns, communications or
information produced by a professional accountant
...
Safeguard created by the profession, legislation or regulation include the following except
a
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Professional standards
c
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Educational, training and experience requirement for entry into the profession
...
Which of the following procedures is ordinarily performed by an accountant during an
engagement to compile the financial statements of an entity?
a
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b
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c
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d
...

11
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A high proportion of the income is cash
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Finance department rely on volunteers who may not have account experience
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There may be high staff turnover because of the nature of the work
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Understaffing in the finance department at certain times due to ad hoc nature of volunteer
working hours
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You instruct the audit junior to confirm whether the post is opened by more than one individual
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All cash receipts that occurred are recorded
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Cash receipts are recorded at the correct amounts in the ledger
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Cash receipts are not misappropriated
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Cash receipts are posted to the correct receivables accounts and to the general ledger
...
In planning an audit of certain accounts, an auditor may conclude that specific procedures used to
obtain an understanding of an entity’s internal control need not be included because of the
auditor’s judgments about materiality and assessments of
a
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Control risk
c
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Sampling risk
14
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Which of the following is not one of those?
a
...

b
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The auditor is required to detect all fraud
d
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Select which of the following statements is false
...
There are two main types of file for audit working papers: the permanent audit file and
current audit file
...
The date of the working papers and the name of the person preparing the file should be yearly
stated in all documents
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The primary objective of working papers is to prove the work was done and complies with
the PSA requirements
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Working papers must only be prepared in electronic form to ensure confidentially and
security
...
Which of the following is not a purpose of planning the audit?
a
...

b
...

c
...

d
...

17
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Being able to fine tune the audit work effectiveness and efficiency
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Avoiding the problem of doing more work than necessary (overauditing)
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Being able to decide early what kind of audit opinion to give
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Avoiding the problem of doing too little work (underauditing)
...
In performing an assurance engagement, a professional accountant typically
a
...

b
...

c
...

d
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19
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Significant issues were resolved
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Understanding of the client’s internal control was obtained and the risks of material
misstatement were assessed
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Client’s schedules were prepared
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Engagement was planned
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The primary audit objective regarding the purchasing of materials by the client is to
a
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b
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c
...

d
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Answer key
1
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3
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5
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7
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9
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11
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13
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15
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17
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19
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A
D
A
D
A
B
A
B
C
D
A
B
A
A
D
B
C
C
C
D



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